Judge Posner labels Firm’s Argument “Frivolous” and “Censures” Firm

Ethics

Wow. Not an IP case but you don't see language like this very often, especially against a big NY firm by a federal court of appeals.  The case is National Union Fire Ins. Co. v. Meade Johnson, and is here.

I saw in my stint for Chief Judge Rader a lot of bad briefs — not necessarly frivolous arguments (though there were some) but just bad briefing. This brief would have driven me nuts, and I'm surprised more judges don't use language like Judge Posner…

LinkedIn and Ethics – Florida opinion

Ethics

There's a lot of flux and uncertainty about a lot of ethics and social media/technology.  For Florida lawyers, a staff ethics opinion had severely hampered lawyers' ability to use LinkedIn.  Apparently, that has been reversed, according to an article here.

I've been asked to present a 3 hour (yes, 3 hour) presentation in the spring of 2014 on e-ethics issues to a big group of Georgia judges, and will be looking at that stuff as I go along, and will post anything of interest here.

Judge Denies Motion for Continuance to Party Who Needs New Firm Because Party Anticipates Litigation with Counsel of Record

Ethics,

Two weeks before a patent trial, the patentee says it expects litigation between it and its counsel.  So, it moves for continuance so it can get new lawyers.  Motion denied.  The case is Alexsam, Inc. v. J.C. Penney Company, Inc., et al., Case No. 2:13-cv-5 (E.D. Tex. Oct. 11, 2013), and an article about it is here.

This is awkward, to say the least.  On the one hand, the defendants surely have an interest in getting the case tried, and the court has an interest in managing its docket, but a lawyer who expects to be sued by his client (seemingly the case here) can't represent that client unless he reasonably believes he can do so and he gets the client's informed consent after full disclosure.  The odds of that being done right are slim.  So, where this ends up is the client seemingly not being able to prosecute its case, and so the firm incurring any damages caused by the withdrawal (assuming the client had a reasonable basis, etc.).

Wild.

A short observation about Ultramercial v. Hulu

Ethics

An off-topic early morning rant.

I teach civil procedure (and ethics, and patent law), and I'm just boggled by some of the amici briefs (I haven't read the petition for cert itself) in Ultramercial v. Hulu.  The case involved the appeal of a 12(b)(6) dismissal.  That requires that, on the face of the patent itself there is clear and convincing evidence the patent was invalid.  (Why?  If 101 matters at all, then it is a basis for invalidity, and so an affirmative defense, and so under long-standing case law, the patentee has to "plead into" the affirmative defense.  Here, that means the patent alone must show clear and convincing evidence of "invalidity" under 101.)

The burden is actually even higher than that.  At the start of Ultramercial, the court wrote:  

Further, if Rule 12(b)(6) is used to assert an affirmative defense, dismissal is appropriate only if the well-pleaded factual allegations in the complaint, construed in the light most favorable to the plaintiff, suffice to establish the defense.See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); Jones v. Bock, 549 U.S. 199, 215 (2007). Thus, the only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility. For those reasons, Rule 12(b)(6) dismissal for lack of eligible subject matter will be the exception, not the rule.

So… how can you ever grant a 12(b)(6) motion granted with that standard?  Imagine a court saying "as a matter of law there is clear and convincing evidence that there is no plausible way this patent is enabled" without considering anything but the patent. 

So, with that background , what is really, um, peculiar to me is lawyers putting in amicus briefs with "evidence" in the appendix about how the claim could be done in 16 lines of code.  One is here.  If one of my civ pro students in their first semester said this was proper, they'd get a zero on that answer.

So, whatever the merits of this patent, I'll bet a metaphorical dollar that the Supreme Court will take one look and say, "12(b)(6)?  cert denied."

But then again, it's early and I've only had one cup of coffee.  So tell me what I'm missing.

Update on Sony v. 1st Media

Ethics

The petition is here.  The question presented was:

Did the Court of Appeals for the Federal Circuit err in restricting district courts’ equitable discretion in evaluating patent unenforceability, contrary to this Court’s precedent in Keystone Driller, Hazel-Atlas, and Precision Instrument, by applying a rigid test that (a) forecloses district courts from considering the entire circumstantial record; and (b) precludes district courts from granting equitable remedies where a patent applicant has violated the PTO’s duty of candor. 

Update:  the rest of the briefs are here (response to petition), and the SG's brief is here.

I still don't think Therasense is a proper construction, and I also still think the issue of its retroactivity could still lurk out there for someone to raise…

Rep. Goodlatte releases second version of “anti-troll” bill

Ethics

An article is here.  Peoplel are slowly beginning to realize that it's hard to define a "troll."  I always use the example of distressed patents:  do we really want patents sold at bankruptcy to have less value to the purchaser solely because it doesn't make the product covered by the patent?

Our NYT op-ed, below, I still think is the right approach… with 285 interpreted right!

The Meaning of Section 285

Ethics

A while back, Chief Judge Rader, Professor Chien and I wrote an op-ed in the New York Times about how section 285 could be used to cure any "patent troll" problem.  (It's here with a really cool patent troll graphic.)  I've been meaning to explain why for a while, and, now with the Supreme Court taking a look, it seems a good time.  (An article on the petition for cert, which quotes that article, is here.)

To me the answer is quite simple, if one does what one is supposed to do with statutes: consult them.

Section 285 and its Legislative History.

            Fee shifting became available in patent cases for the first time in 1946, when Congress adopted 35 U.S.C. § 70.  That statute gave federal courts broad equitable powers to allow for fee shifting to prevent injustice to accused infringers, as well as to ensure that an accused infringer would not only pay a reasonable royalty.  See S. Rep. No. 1503 (79th Cong. 2d Sess. 1946).  In the years immediately following the adoption of Section 70, courts emphasized that the statute focused on equity, fairness, and justice.  For example, courts stated that awarding fees should be “bottomed upon a finding of unfairness, or bad faith in the conduct of the losing party, or some other equitable consideration of similar force, which makes it grossly unjust that the winner . . . be left to bear the burden of his own counsel fees  . . . .”  Park-in-Theatres, Inc. v. Perkins, 190 F.2d 137, 142 (9th Cir. 1951).  Courts considered all factors, including whether the patentee could have simplified the case earlier, whether there were unreasonable infringement allegations, delay in suing, dropping customer-defendants, and so on.  E.g., Merrill v. Builders Ornamental Iron Co., 197 F.2d 16 (10th Cir. 1952); Aeration Processes, Inc. v. Walter Kidde & Co., 170 F.2d 437 (2d Cir. 1948); Brennan v. Hawley Prods. Co., 98 F. Supp. 369 (N.D. Ill. 1951).

Nothing changed in 1952.  Instead, Congress re-codified Section 70 into what we now have as Section 285.  "Exceptional case" has no clear meaning.  Congress could have said "in frivolous cases, fees can be shifted," but for some reason it added "exceptional case."  The Federal Circuit in 1985 analyzed the legislative history (always risky, but in this case, correct I believe) and recognized Congress made clear that it was adopting the cases that had been decided between 1946 and 1952 under Section 70.  Congress explained that was it was adding the phrase “exceptional case” to the Section 285 to capture the approach of those cases.  See Mach. Corp. of Am. v. Gullfiber AB, 774 F.2d 467 (Fed. Cir. 1985) (explaining addition of the “exceptional case” language).  Thus, Section 285 focuses on fairness, justice, and equity. It is a flexible statute, by design no different from Section 70.

Section 285 as Interpreted by The Federal Circuit

Early decisions of the Federal Circuit were generally consistent with the intended meaning of the state.  For example, the Federal Circuit stated that unintentional errors were not enough to establish an exceptional case, but gross negligence in asserting infringement was sufficient.  Machinery Corp., 774 F.2d at 473 (“The end inquiry . . . is whether [the patentee] recklessly concluded that [there was infringement] . . . .”).  Again, equity was the real issue, and there was no finding of intent necessary:  gross negligence was enough.

However, a 2005 decision suggested that Section 285 had a radically different meaning.  Without discussing the statute's meaning or these early Federal Circuit decisions, the court in Brooks Furniture Mfg., Inc. v Dutailer Int’l, Inc., 393 F.3d 1378 (Fed Cir. 2005) stated that the standard developed by the Supreme Court in Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (1993) governed fee shifting under Section 285.  According to Brooks Furniture, to obtain fees under Section 285, an accused infringer must establish both that the infringement suit was objectively and subjectively baseless.

In my view, this is simply wrong.  

Foremost, the interpretation is inconsistent with and unsupported by the statute’s text and history. 

It is also absurd to assert that the text Congress adopted in 1952 included standards developed 40 years later. 

Further, the policy behind the high standard in PRE has nothing to do with fee shifting.  PRE was a liability case:  the Court held that, because of the First Amendment right to petition government, a party can be sued for having previously sued someone only upon a showing the suit had been objectively and subjectively baseless.  If one extends PRE to fee shifting, then Congress (and presumably state legislatures) can shift fees only if a suit is objectively and subjectively baseless.  If that is true, then no doubt dozens of statutes are unconstitutional.

My View

As I wrote in the New York Times, Section 285 is flexible enough to cure any problem.  The Federal Circuit just needs to do what Congress told them to do.

Supremes Deny Cert in Sony v. First Media: Update

Ethics

The petition is here.  The question presented was:

Did the Court of Appeals for the Federal Circuit err in restricting district courts’ equitable discretion in evaluating patent unenforceability, contrary to this Court’s precedent in Keystone Driller, Hazel-Atlas, and Precision Instrument, by applying a rigid test that (a) forecloses district courts from considering the entire circumstantial record; and (b) precludes district courts from granting equitable remedies where a patent applicant has violated the PTO’s duty of candor. 

Update:  the rest of the briefs are here (response to petition), and the SG's brief is here.

I still don't think Therasense is a proper construction, and I also still think the issue of its retroactivity could still lurk out there for someone to raise…

Federal Circuit Unanimously Affirms Inequitable Conduct, Teaching that Curing False Statements Needs to be Done Clearly

Ethics, ,

In Intellect Wireless, Inc. v. HTC Corp., the court affirmed the district court's conclusion of inequitable conduct.  Boiled down, the applicant filed a Rule 131 affidavit stating that it had actually reduced the invention to practice when, in fact, it had not.  In a later affidavit, references to "actual reduction to practice" were removed, but the affidavit still contained references to a prototype–that had never been made, among other things.  The court held that the affidavits were material, relying upon Therasense's statement that false affidavits were so by their nature.  It held there was intent to deceive based upon the first affidavit alone, confirmed by the filing of the second without clearing matters up coupled with similar misconduct in other related cases.

The case does not appear to break new ground, but it does reinforce the fact that inequitable conduct is not a dead letter.

Federal Circuit Affirms District Court’s Refusal to Allow Amendment of Contention Interrogatories

Ethics

Emphasizing that even though discovery had not closed, the court unanimously affirmed a district court's decision not to permit amendment of contentions relating to infringement and claim construction.  The cae is Kruse Techn. Partnerships v. VW, opinion by Judge Linn (joined by Judge Newmann).  Judge Wallach dissented on claim construction grounds.

This is one of those tough issues:  you have to get your claim construction contention correct, early, but… even what the district court holds has a large chance of being wrong.  Bottom line is amend early, though not often.

Judge: Abolish Exclusive Jurisdiction of CAFC Over Patent Appeals

Ethics, , ,

Chief Judge Woods of the Seventh Circuit spoke recently and said that the CAFC was "uniformly bad."  An article with link to the text of her remarks, is here.  The link to the text is here.

Wow.

I started doing patent cases in September, 1989.  At that time, I could argue anticipation from multiple unrelated references.  Claim construction?  Maybe leave it for the jury, maybe the judge, maybe never decide it.  DOE was the wild west.  The court has done a lot of good.

Nowadays the disputes to me are narrower, but important.  Section 101 is an obvious (ha, ha) area where the make-up of the panel could be outcome determinative.  But that would probably be the case no matter who was trying to understand what the Supreme Court believes the law ought to be.  

Those key splits I mentioned up front were, in contrast, fundamental questions that had never been resolved among the circuits despite 30 years of work with the patent act.   Patent law is a lot better than it was — better — and it is a lot more efficient than it was — I know who is going to tell me what the claim means, and a lot of (albeit indeterminate) rules to help me figure that out.  DOE is nowhere like it was.  Damages — you would not recognize the damaegs theories we used to be able to assert.

Could it be better?  I have no doubt about that it can: it is a human institution.  The role of prior panel decisions sometimes is not given enough weight (a pet peave I'll write about under Section 285, shortly).

Would replacing it with the "old" system make it better?  I have no doubt whatsoever that it would not.  I have no doubt it would make things worse.